Family, Income and IRA Trusts
Attorneys who work with Hawaii family trusts often see a critical point in the passing of generational wealth. Even in the case of smaller estates, that moment and how estate planning is managed can make a significant difference over many decades for the beneficiaries.
For example, when a grandparent leaves $100,000 to a minor-age grandchild, it may seem like college and graduate school will be covered by this amount. But education costs are rising all the time and inflation can further erode the value of a bequest. After a number of years, the bequest may not be adequate to pay for a quality education. But consider an alternative approach:
- While living, the grandfather puts that $100,000 into an IRA trust. Hawaii IRA trusts can include Roth IRAs, which do not require taking a distribution in retirement. In other words, a Roth IRA can be passed on to the grandchild.
- Beginning when the child is three, assume an eight percent rate of return on the IRA. The fund will continue to build.
- By the time the grandchild is 18 and ready to enter college; the Roth IRA will have more than doubled in value.
Such a scenario requires restraint from the grandchild, of course. Also, a grandparent should seek the assistance of a trusts lawyer to navigate Hawaii income trusts law.
Trust litigation in Hawaii
Another critical juncture seen by trusts lawyers in Hawaii dealing with family trusts involves litigation. It is not at all uncommon for disputes between heirs to arise with regard to trusts. This can be a bit more complicated, and perhaps contentious, when the trustee for the estate is a family member. In many instances, the grantor who is planning his or her trust should consider a trust company that can handle such disputes in an objective, dispassionate manner.
Still, not all professional trustees behave in a cooperative, prudent or even legal manner. For example, the assets of the trust may be invested unwisely, or the assets may simply be distributed in violation of the terms of the trust. Other scenarios may also lead to trust litigation. In Hawaii, where affluent people from the mainland as well as from other countries come to retire, litigation is unfortunately a common area of legal practice.
Attorneys with experience in Hawaii trust litigation can help resolve these issues, restoring the outcome to what the grantor intended. More important, careful estate planning with the help of a trusts lawyer can reduce the problems that lead to litigation in the first place.
At the Law Offices of Reuben S.F. Wong, out trusts attorneys in Hawaii cultivate long-standing relationships with our clients, based on trust and open lines of communication. For the convenience of our clients, weekend appointments are available, and we provide services in Mandarin and Cantonese.
